1. My first question is about HMRC, when the money has been transferred to the bank account and overtime the amount will increase. Will that cause a red flag with the bank company? Inturn it may lead to reporting to the HMRC or the GOV?

2. Will transferring from multiple PayPal accounts to a single bank account cause an issue?

1. If you are thinking that you are going to generate so much income that HMRC will be looking into you then you should think about registering a company (along with a business bank account) and doing the tax side completely above board

Since you are in the UK, have you ever heard of HMRC's "Connect" programme?

At the heart of HMRC’s counter-evasion efforts lies a powerful computer program called “Connect”. Launched in the summer of 2010, it sifts vast quantities of information — more even than the data stored in the British Library — in its hunt for underpaid tax.

It ploughs through disparate, previously unrelated information to detect otherwise invisible networks of relationships. It automates analysis that would once have taken months, if it could have been done at all.

HMRC does not divulge all the sources of information it feeds into Connect, but it is thought to include details of bank interest, credit card data and Land Registry reports.

In an example of an early success involving Connect, HMRC analysts identified a string of credit card transactions associated with a private London residence. The property was worth millions of pounds and was owned outright by someone with no tax history and a state pension as their only source of visible income. A routine internet search found advertisements for an escort agency at the address. After an HMRC investigation the owner admitted trading there for at least six years, with takings of more than £100,000 a year.

HMRC has been energetically extending its data gathering powers. It recently acquired the right to force apps and platforms such as Apple, Amazon and Airbnb to hand over data — including names and addresses of sellers and advertisers — that would help it identify tax-evading businesses. Payment providers such as PayPal are another new source of data. Money services businesses, such as currency exchange services, are the next on the list, according to a recent consultation.

The tax authority insists that its new powers have no implications for individuals’ privacy, as it is only seeking information on business activities. But the Electronic Money Association, which represents companies like eBay, Airbnb and PayPal, worries there are insufficient safeguards concerning the way the data are used. Last year, it said the transfer of personal data to government could have a “profound” impact on consumer trust.

HMRC can already put together a detailed picture of most taxpayers, according to Mike Down of RSM, the accountancy firm. “Now they have Connect, the Revenue knows more about people than they know about themselves.”

This is indeed some scary stuff, but it's typical in the UK where there "privacy" is more of a concept than a right.

I wish I had that on the wall of my office when I setup my first business 15 years ago

PayPal have to be licensed to operate as a financial institution dealing with funds from or to UK persons of banks. Underlying credit card data, bank data, and PayPal data are available to HMRC if wanted. Effectively all sources of payments or transactions via financial institutions in UK are visible if wanted to HMRC, and if ‘hidden; then they get a court order to disclose. HMRC are usually quite reasonable to deal with, but if you try to avoid tax (which is a criminal offence) you will get severe problems.

In the USA we have the good ol' IRS (Internal Revenue Service) but they are not even slightly as officious as the European taxing bodies, particularly the HMRC. In the UK they send bailiffs to follow you around and otherwise really dig into your affairs. For the IRS to do that takes a lot, and has to be worth their while.

I once had a client who owed only £650 to HMRC for a Council tax levy, and they literally followed the guy around his home and work in Watford for months. It's quite invasive, and along the same lines as the BBC goons that come visit you to be sure you have a "TV License".

Thanks for all the advice.
Dodging tax is not a concern , but while paying the tax I am guessing I will have to show them that the money is from my eBay/ PayPal business and they are both stealth accounts.
So will the stealth accounts be a problem with HMRC? And if yes, than is there a way around it?

Thanks for all the advice.
Dodging tax is not a concern , but while paying the tax I am guessing I will have to show them that the money is from my eBay/ PayPal business and they are both stealth accounts.
So will the stealth accounts be a problem with HMRC? And if yes, than is there a way around it?

My accountant manages my LTD business account. He said it's fine for me to divert funds from any of the bank accounts connected to my stealth paypals (I didn't tell him the paypals are stealth I just said I had to create a new paypal account with a different bank account connected to it as my original one got banned for a silly reason). He simply said as long as the bank account is used just for business purposes so he can clearly see the transactions. He can do the accounts off them.

Just make sure you print all sales receipts, statements etc off paypal and ebay. The more records you keep the better it is for everyone.

The stealth aspect is just to fool paypal and ebay in letting a previously suspended user back on to their platforms. The payments are reaching genuine bank accounts belonging to you so you still owe tax like everyone else.

As the above poster states, what matters is you keep track of the funds going into your bank that matters. Keeping those accounts separate for business purposes, your accountant can manage and report the income easily.